The European Union (EU) is establishing a Water Facility with a budget of EUR 500 million for the African, Caribbean and Pacific (ACP) signatories of the Cotonou Agreement to help improve access to drinking water and sanitation for the disadvantaged population in those countries by actively addressing the issue of the financing gap. The Communication proposes procedures for the establishment of the Water Facility and outlines the future development of the EU Water Initiative.

ACT

Communication of 26 January 2004 from the Commission to the Council and the European Parliament on the future development of the EU Water Initiative and the modalities for the establishment of a Water Facility for ACP countries [COM(2004) 43 final - Not published in the Official Journal].

SUMMARY

A WATER FACILITY FOR ACP COUNTRIES

The Water Facility for African, Caribbean and Pacific (ACP) countries, is intended to serve as a catalyst by supporting development and reform of the relevant sectoral policies and through flexible and innovative methods of financing water supply and sanitation projects and programmes.

Basic principles

The Facility is based on three key principles:

Governance: The Water Facility is to concentrate its activities on ACP countries which have a sound national water policy or which are strongly committed to developing one, and on countries that prioritise spending on social sectors. It will help those countries to establish the institutional and regulatory framework necessary to attract additional financial resources;

Ownership: The facility is entirely demand-driven. It will be an instrument for supporting and deepening the involvement of ACP actors in the design and implementation of water policies;

Innovation and flexibility: In order to achieve maximum impact a creative combination of grants and other sources are envisaged to fund basic infrastructure. The proposed grants could constitute the necessary seed capital to get projects off the ground and be a tool in forging the public-private partnerships needed to increase funding.

Activities funded

The Water Facility will mainly fund two types of activity: improving water management and governance, and cofinancing drinking water and sanitation infrastructure.

The activities relating to improved water management and governance are:

institution building and support for reforming the sector;

integrated management of water resources at national level and at that of ACP river basins.

For the second category of activities the Water Facility uses flexible and innovative methods to finance water and sanitation projects and programmes for low-income users and socially disadvantaged areas.

Management of the Facility

The organisational structure for the management of the Water Facility has been set up within the European Commission, staffed with EU officials. The officials on this team are responsible for establishing implementing procedures for the facility.

However, in the preparation and implementation of projects to be financed, maximum use should be made of the expertise available outside the Commission, in particular through expert groups and collaboration with the European Investment Bank and other development finance institutes, and, where appropriate, the private sector and non-governmental organisations (NGOs).

The projects are selected on the basis of a call for proposals open to most of the state and non-state actors concerned in the ACP and EU countries. Proposals are selected on the basis of criteria defined by the European Commission in the call for proposals, which must be consistent with the general objectives of sustainable development and the EU's water management policy in the developing countries and with the integrated river basin water management programmes, and take account of factors such as the implementing capacity of the partners and the maturity of the project.

THE FUTURE OF THE EU WATER INITIATIVE

The Communication also assesses the outlook for the EU Water Initiative launched during the World Summit on Sustainable Development.

It finds that the Initiative has made considerable progress, noting that the drinking water and sanitation objectives will have to be achieved within the framework of integrated management of the river basins.

The Initiative concentrates on Africa, the countries of Eastern Europe, the Caucasus and Central Asia, the Mediterranean and Latin America.

The Commission considers that the progress made is not sufficient to meet the Millennium Development Goals without a significant increase in financing and improved mechanisms to help development aid attract other resources (private sector, development banks); the creation of a European Water Facility will serve both these purposes.

BACKGROUND

The Communication follows up on the EU Water Initiative launched at the World Summit on Sustainable Development in Johannesburg in September 2002. The summit confirmed the objective, set in the context of the Millennium Development Goals, of halving the number of people in the world who do not have access to drinking water or basic sanitation by 2015.

Unsafe water causes more deaths than war does. More than 1 100 million people in the world have no access to drinking water, and 2 400 million do not have access to adequate sanitation. In Africa more than 40 % of the population is without drinking water, and even more lack appropriate sanitation services.

RELATED ACTS

Decision No 7/2005of the ACP-EC Council of Ministers of 22 November 2005 concerning the use of a second allocation of EUR 250 million from the conditional EUR 1 billion under the ninth EDF to be used for the second instalment of the ACP-EU Water Facility [Official Journal L 48 of 18.2.2006].
The Decision officially authorises allocation of a second tranche of EUR 250 million to the ACP-EU Water Facility.

Decision 2004/632/ECof the ACP-EC Council of Ministers of 6 May 2004 on the use of the reserve of the long-term development envelope as well as resources from the Investment Facility of the ninth European Development Fund for the establishment of an ACP-EU Water Facility [Official Journal L 289 of 10.9.2004].
The Decision officially authorises allocation of a first tranche of EUR 250 million to the ACP-EU Water Facility and provides for the release of a further EUR 250 million.

Council Decision of 26 April 2004 on the position to be adopted by the Community in the ACP-EC Council of Ministers concerning a Decision on the use of the reserve of the long-term development envelope as well as resources from the Investment Facility of the ninth European Development Fund (EDF) for the establishment of an ACP-EU Water Facility [Not published in the Official Journal].
The Council provides that the reserve of the long-term development envelope as well as resources from the Investment Facility of the ninth EDF are to be used for the establishment of the ACP-EU Water Facility.

Council Decision 2004/289/EC of 22 March 2004 concerning the partial release of the conditional amount of EUR 1 billion under the ninth European Development Fund for cooperation with African, Caribbean and Pacific countries in order to establish a Water Facility [Official Journal L 94, 31.03.2004].
In this Decision the Council agrees to establish the Water Facility for ACP countries. In accordance with the provisions of the Financial Protocol to the ACP-EC Partnership Agreement, the Council notes that the level of commitments and disbursements at the end of 2003 in conjunction with forecasts for the period 2004 to 2007 allows the release of EUR 500 million from the ninth EDF out of the budget of EUR 1000 million for the establishment of the Water Facility. The Council approves the release an initial tranche of EUR 250 million. Decisions will be taken later on the remaining sum.